Let us estimate the business cost for this charter company to run Cessna 172 twice a month as mentioned earlier is as follows:
Total business cost includes fixed cost, running costs or operational costs and landing and overnight tie down costs.
Cost of running the aircraft: Fuel required for running this charter flight is its main component: $ 1500 per one hour 2
Total flying hours in a month: For southern side: (2+3) x 2 = 10 hours
For northern side : (2+2+2) x 2 = 12 hours
Total flying hours = 10 + 12 = 22 hours
Additional flying hours to be considered / month = 10 hours
Total flying hours = 12 + 22 + 10 = 44 hours
Therefore the total cost accounts to $66000 / month.
The total cost per one year = $792000 (Fig 1)
Lease costs for aircraft :
Aircraft was purchased with 25 % residual cost of flight ($259,500) for 5 years: $64750
Lease cost for one year = $12950
Lease cost for one month = $ 1079
Fixed costs (This is the daily cost of running a business ie. Rent,
2: Jagson Airlines. 2009. Charter services. Charter rules, terms and conditions. Rates : flying hours. http://www.jagsonairline.com/charter_services.htm.
employee wages: It includes the charges for the pilot : Chief pilot is the only one person employed here. His salary component (including the benefit of super annuation) is $60,000 (Fig 2).
For additional assisting staff (including the benefit of super annuation) : $25,000
Costs incurred on equipment, insurance, Air operators
approvals, Pilots annual checks and
renewals = $ 10,000.
Lease for the office building : $60,000 (Fig 3)
Landing and overnight tie down charges for the airfield per year : $24,000 (Fig 4)
Detailed description of...
The charter aircraft will fly from Groote Eylandt (NT) to southern side in one fortnight and will return to Groote Eylandt (NT) and again from the same place it flies to northern side. Therefore in a month, it has to travel once in southern direction i.e. from Groote Eylandt to:
Each time, it has to carry two medical staff and 40 kg medical accessories. All the basic principles of aviation including weather preparedness have to be kept in mind while planning the route plan (Parma, 1999).
The net profit calculated by the company is $ 705650 which has been added to all the costs of running aircraft and accordingly annual tender amount of $ 1689600 per year and $140800 per month has been finalized.
For successful flying with out any legal complications and for ensuring security norms of the respective nation, Cessna aircraft has to follow the aviation rules and regulations very strictly (Bruckert and Roud, 2007). The federal aviation regulations have to be followed very strictly while carrying out the aviation. The congestion management of aircrafts is essential along with the implementation of emission standards of aircrafts according to the federal regulations3.